Question
Suppose the quantity demanded for a product is given by=20(+1)/4q=20(A+1)p/4, where p is the price of the good. The good is sold by a monopoly
Suppose the quantity demanded for a product is given by=20(+1)/4q=20(A+1)p/4, where p is the price of the good. The good is sold by a monopoly firm with constant marginal cost equal to 20 and fixed cost =400(+1)2f=400(A+1)2. Let A be the 9th digit in your student number and answer the following: \ a) Suppose the firm must charge the same price to all consumers.Derivethe profit maximizing price and quantity if the firm were to serve the consumers interested in this good. (8 marks).
b) Suppose the firm were to charge every consumer the same price. Will the firm find it profitable to operate? (4 marks)
c) Suppose the firm were able to practice perfect price discrimination. What would be the firm's profit in this case? Would the outcome be efficient? (8 marks)
d) What is the efficiency loss of the outcome in part (b) ? (5 marks)
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